Ep. 422: When I Retire, What Really Happens to My Money?

We want to answer your questions about money. Email us and you may hear yours on the air: askpete@petetheplanner.com

This week on the Pete the Planner Show, Damian becomes a radio star! 

No time to listen?  Here’s a preview of what happened and when:

Show Notes:

MAILBAG QUESTION 1: [3:10]

  • “I’m 25 years old and started meeting with a financial planner. They have recommended a whole life insurance policy as a part of a way to build equity. I’ve read some things about this cash value life insurance, but I was hoping to get more clarity from you. I have no student loans and the only debt I have is a car payment each month.  Is this something you would recommend for me at my age or would you recommend a Roth IRA?

    • PETE: We don’t like or dislike particular financial products. What we like or dislike is the FIT for a particular person of those financial products.
    • So the real question is, “Is a whole life insurance appropriate for a 25-year old who doesn’t look like they’re maxing out their Roth IRA or employer’s retirement plan to build wealth?”
    • One reason to purchase life insurance is “survivor need”
    • Another reason to purchase is ensuring “future insurability”
    • DAMIAN: I’m in favor of young people purchasing coverage because of the unknowns of life and the cheaper price of coverage, generally
    • But in this case, at 25 with no specific reason…seems like someone may be trying to squeeze her into a product

 

MAILBAG QUESTION 2:  [16:14]

  • “When a person retires and …no more paycheck, does their funds balance in 401(k) freeze at that time or is still susceptible to the ups and downs of the market? For example, a person retires with $250,000 in account, does that balance gain/loss as usual or does it freeze and said balance is what they have to draw from forever? I still have 4 or 5 years before retirement, I assume the balance you have does not retire with you and is still invested in the market, but not adding to it. Is that the case? Is there a safe strategy to minimize change percentage in stocks and bonds?”

    • DAMIAN: Nothing. Nothing changes in your accounts when you retire. Unless you make changes, nothing different should be happening.
    • You can minimize volatility you see inside of that account, it depends on how much money you need and how long you’re going to need it
    • PETE: Some people retire and think that they should pull money from their retirement account(s). Do they need to?

Be sure to stay engaged for segment 3!  Check it out in the full show!  — click PLAY below.

 

SIDE NOTE:

— Before you go, give your personal finances a facelift. Peep our personal guidance platform: Hey Money.

 

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